Test Bank for Horngren's Accounting: The Managerial Chapters, 14e (Miller-Nobles)\ Chapter 1-9 Chapter M: 1 Introduction to Managerial Accounting Learning Objective M:1-1 1) Managerial accounting focuses on providing information for internal planning and control. Answer: TRUE Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
2) Financial accounting prepares reports for internal purposes, whereas managerial accounting provides information to external stakeholders. Answer: FALSE Explanation: The reverse is true. Financial accounting serves external stakeholder information needs while managerial accounting serves the needs of managers and internal staff. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
3) Financial statements prepared for investors and creditors often include forward-looking information because they make decisions based on a company's future prospects. Answer: FALSE Explanation: Financial statements provide mostly historical information; relevant and faithfully representative information and focused on the past. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
4) Managerial accounting reporting by a public firm is required to follow the rules of GAAP. Answer: FALSE Explanation: Managerial accounting information is not guided by GAAP but rather by the concept of usefulness to management for decision making purposes. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting
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PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
5) Financial reporting is typically much more detailed than managerial accounting. Answer: FALSE Explanation: Financial reporting is typically less detailed than managerial accounting information. Financial accounting reporting is usually summary reports, prepared primarily on the company as a whole, usually on a quarterly or annual basis. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
6) Managerial accounting provides financial statements that report results of operations, financial position, and cash flows both to managers and to external stockholders. Answer: FALSE Explanation: Managerial accounting provides the information needed to plan and control operations and therefore serves the information needs of internal parties such as managers and staff. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
7) Which of the following is a focus of managerial accounting? A) to generate a company's financial statements for tax reporting B) to provide information to business managers to assist them in controlling their businesses C) to provide information to shareholders to assist them with their investment decisions D) to ensure that the reports produced for internal and external business purposes are GAAP compliant Answer: B Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
8) Which of the following statements is true of managerial accounting? A) The external stakeholders of a company are the primary users of managerial accounting. B) Managerial accounting information is used to help managers plan, direct and control their operations. C) An external audit by an independent CPA is required for managerial accounting information. D) Managerial accounting information must comply with Generally Accepted Accounting Principles. Answer: B Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
9) Managerial accounting information for a company is primarily used by ________. A) its customers to understand the pricing of the product B) its creditors to understand the credibility of the business C) its employees to plan, direct and control operations D) its investors to make their investment decisions Answer: C Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
10) Which of the following statements is true of financial accounting? A) It provides information to investors needed for their investment decisions. B) It provides future focused information needed for managing and delegating operations. C) It focuses on detailed reports for parts of the company rather than the whole company. D) It focuses on planning, directing and controlling day-to-day operations. Answer: A Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
11) Which of the following is the primary focus of managerial accounting? A) providing information that managers need to make operational decisions B) providing historical data to investors and creditors C) providing summarized results of operations D) providing information to comply with laws and regulations of government bodies Answer: A Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
12) Which of the following is the primary focus of financial accounting? A) providing information that managers need to make operational decisions B) providing summarized information on operational results to investors and creditors C) providing information to managers to assist in planning, directing and controlling operations D) providing highly detailed information on product lines, regions, and divisions Answer: B Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept
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H2: Why Is Managerial Accounting Important? (H1)
13) Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to invest in one of the companies and is trying to decide which company has the better past performance. Connie is examining ________. A) managerial accounting information B) financial accounting information C) regulatory accounting information D) organizational accounting information Answer: B Explanation: Financial accounting information is focused on external users and past performance. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
14) Who is a primary user of managerial accounting information? A) investors B) company managers C) creditors D) government authorities Answer: B Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
15) Which of the following statements is true of managerial accounting? A) It is required to follow GAAP. B) The focus is on the future. C) An external audit by an independent CPA is required for managerial accounting information. D) Summary reports are prepared primarily for the company as a whole. Answer: B Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
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16) Which of the following statements is true of financial accounting? A) Summary reports are prepared primarily on the company as a whole. B) It provides future focused information needed for managing and delegating operations. C) It does not need to follow GAAP. D) It focuses on planning, directing and controlling day-to-day operations. Answer: A Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
17) Which of the following would be primary users of financial accounting information? A) supervisors B) company managers C) foremen D) government authorities Answer: D Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Why Is Managerial Accounting Important? (H1)
18) Miguel, a manager for Sierra Company, is inspecting the reports provided by his company's accounting department. He wants to decide how to schedule his department's employees in production next week. Miguel is examining ________. A) managerial accounting information B) financial accounting information C) regulatory accounting information D) organizational accounting information Answer: A Explanation: Managerial accounting information is for internal users and is future focused. Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Application H2: Why Is Managerial Accounting Important? (H1)
19) A company's organizational chart shows the relationships between departments and divisions and the managers that are responsible for each section. Answer: TRUE Diff: 1 LO: M:1-1 AACSB: Application of knowledge AICPA Functional: Reporting PE Question Type: Concept H2: Managers' Role in the Organization
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